Last year, an Exchequer surplus of €5 billion was reported, a €12.4 billion improvement over the €7.4 billion deficit registered in 2021. Both the rapid growth in tax revenue and the drop in Covid-related public spending are reflected in the improvement.
On a more comprehensive general government basis, this is consistent with a surplus of c. €5.2 billion, or 2 percent of GNI*. Excluding estimates of windfall corporation tax receipts, this is consistent with an underlying general government deficit in the region of €5¼ billion.
Aggregate tax receipts closed the year at €83.1 billion, ahead of 2021 by €14.7 billion (22 percent). Income tax receipts of €30.7 billion were collected in the year, up by €4.1 billion (15 percent) in 2021, reflecting the post-pandemic recovery in employment.
VAT receipts amounted to €18.6 billion last year, €3.2 billion (20½ percent) ahead of a year earlier, reflecting the release of pent-up consumer demand following the full elimination of mobility restrictions in the first quarter of last year.
Corporation tax receipts ended 2022 at €22.6 billion, ahead of the previous year by €7.3 billion (48 percent). This means that, for the first time ever, corporation tax receipts were the State’s second-largest income stream last year. That said, a significant part of this revenue stream is expected to be once-off in nature. It is also notable that the corporation tax figures for December were below the levels expected by the Department of Finance.
In contrast, excise duty receipts closed the year at €5.4 billion, down €0.4 billion (7 percent) in 2021. This is, in part, driven by the impact of Government policy introduced to help address increases in the cost of living.
Total gross voted expenditure in the year amounted to €88.8 billion, €1.2 billion or 1.4 percent ahead of the same period in 2021. This reflects the allocation of funding to address the cost of living pressures, provide for Ukrainians fleeing the war, and also continue to provide for improvements in public services, social supports, and infrastructure with capital spending of almost €11 billion.
Commenting on the figures, the Minister for Finance, Michael McGrath T.D. said: “The end-2022 Exchequer figures show a large headline surplus was recorded last year. This reflects a number of factors, including robust income tax and VAT receipts, both of which reflect the strength of the post-pandemic recovery in demand and employment. The phasing out of Covid-related expenditure is another reason for the surplus last year.
“By far the most important factor behind the headline surplus is the strength of corporation tax revenue – receipts from this source have doubled since just before the pandemic. My Department estimates that around half of these receipts are potentially at risk – if these receipts were excluded, we would instead be facing a significant deficit. That is why Government has acted to mitigate this vulnerability by transferring part of this windfall to the National Reserve Fund to rebuild our fiscal resources.
“It is also important to stress that today’s figures are, of course, backward-looking. They do not offer a guide as to the challenges that we will have to address going forward. Keeping the public finances on a sustainable trajectory puts us in the best position to meet these future challenges. That is what this Government will continue to do.”